Extensive fix and rent

[Tim Mensch]

I'm currently looking at a home in my neighborhood that would be a great flip opportunity.  I had a private money investor that was ready to go in 50/50 but unfortunately he had some health issues to take care of.  I have been searching for a portfolio lender to finance the flip but as most of the forum posts related to this topic have said, this is easier said then done. I did however find a bank that would finance the purchase price/repairs if I held on to the property to rent.  My question is: Do any of you use a fix and rent strategy on houses that need extensive repairs (50,000+)?  If so, how did you finance these deals without having to put up your a signifiant amount of cash in the long term?  I would imagine a cash out refinance would work but I am curious to see if others used this particular strategy or if this is even possible through financial institutions.  My example would be a 110,000 purchase, 55,000 in repairs with an arv of 230000.  The rent would bring around $2100 per month.

[Stephen Chittenden]

We recently finished a $90k+ rehab on a property that we purchased for $69k. We paid for the acquisition and rehab in cash though, so that's not really what you are looking for. We used a credit union to do the cash-out refinance. The rehab took more than six months to complete, so they were willing to use an appraisal on the rehabbed property to determine the amount they were willing to lend. In the end, we were left with about $23k invested in a home worth $205k. We were happy with that result.